Bitcoin CPUs Coming, Says Investor

SAN JOSE, Calif. — Bitcoin will spawn an emerging market for specialized parallel processors, according to a veteran high-tech investor, but one young startup engineer is skeptical.

"There's a big opportunity in silicon with a new wave of chip design ideas, which is not something we would have predicted a year ago," said Marc Andreessen co-founder and principal of Andreessen Horowitz.

Bitcoin is an online alternative to currency and banking that requires specialized silicon. This kind of "crypto currency is the first thing like the Internet since the Internet," said Andreessen in an on-stage talk at the Open Compute Summit last week:

Crypto currency is the first practical way to do business over the Internet with no central hub or trust authority needed to validate a secure transaction. It seems like a very, very big opportunity because it will be used by everything from big stock exchanges to services like AirBnB sending electronic room keys back and forth for individual locks.

The approach requires a form of highly parallel computing called mining. "Mining is a very specific thing that can use parallelism, so I think custom chips for it will be around for a while -- we're already seeing pitches for bitcoin-optimized datacenters," he told the crowd.

Andreessen (right) spoke about bitcoin on stage with Andy Bechtolsheim.

Thomas Sohmers, a 17-year-old wiz kid and chief executive of a high-performance server startup, said he has explored the technology and is not interested in it. "It's a kind of Ponzi or pyramid scheme where the people who get in first reap the most rewards," said Sohmers on the show floor of the OCP event.

Sohmers persuaded one of his partners to give up pursuing the technology, which uses silicon dedicated to the SHA-256 encryption algorithm.

"It's the biggest waste of processing power in the world," said Sohmers, whose startup, Rex Computing, is building servers using FPGAs and accelerators from Adapteva and others. "There are already ASICs out there for bitcoin mining," he noted, citing Butterfly Labs.

Bitcoin was used for the illicit Silk Road operation and speculators, but lacks legitimate uses, Sohmers said. However he noted that online tech shop Tiger Direct recently announced it will accept bitcoin.

If they bring certainty by recognizing Bitcoin, this mining issue will go. Qualcomm and Intel will enter the game and provide tools that can win the game. I am not sure we have firms of great quality in the mining space at the moment owing to legal issues surrounding Bitcoin

If Bitcoin continues to become more widely established and accepted we would expect to see more stable and reliable associated businesses emerge as it matures, as well as decreased volatility in its value. In this particular case, this company - the Mt. Gox bitcoin exchange - has had such issues before, and as a result has been losing market share to competitors for a while.

Thanks for adding this info to the post. Yes, Nordic is a great place to locate data centers and benefit from natural cooling. Much better than having datacenters power hungry machine in Arizona :-) In addition to that low energy consumption benefits to Bitcoins mining. It will be interesting to see which next will be placed in Alaska!

thank you Patrick...very intriguing info...so our future digital currency will be run by Swedes somewhere close to North Pole...cool...would you be interested to give a talk about this topic at emerging technologies conference in Vancouver in 2015? program at www.cmosetr.com, Kris (kris.iniewski@gmail.com)